Item 1.01. Entry into a Material Definitive Agreement.
On September 25, 2017, Oasis Midstream Partners LP (the Partnership), an indirect subsidiary of Oasis Petroleum Inc. (the
Company), closed its firm commitment underwritten initial public offering (the Offering) of 7,500,000 common units representing limited partner interests in the Partnership (Common Units) at a price to the public
of $17.00 per Common Unit. The Offering was underwritten by a group of underwriters (the Underwriters), with Morgan Stanley & Co. LLC acting as the sole representative of the several Underwriters. The Partnership granted the
Underwriters a
30-day
option to purchase up to 1,125,000 additional Common Units on the same terms (the Option). The material terms of the Offering are described in the prospectus, dated
September 20, 2017 (the Prospectus), filed by the Partnership with the Securities and Exchange Commission (the Commission) on September 22, 2017, pursuant to Rule 424(b)(4) under the Securities Act of 1933, as
amended (the Securities Act).
Contribution Agreement
On September 25, 2017, the Company entered into a Contribution Agreement (the Contribution Agreement) by and among the
Company, the Partnership, Oasis Petroleum LLC (OAS LLC), OMS Holdings LLC (OMS Holdings), Oasis Midstream Services LLC (OMS), OMP GP LLC (the General Partner) and OMP Operating LLC (OMP
Operating), whereby, concurrently with the closing of the Offering, OAS caused OMS to contribute to OMP Operating a 100% limited liability company interest in Bighorn DevCo LLC (Bighorn DevCo), a 10% controlling limited liability
company interest in Bobcat DevCo LLC (Bobcat DevCo) and a 40% controlling limited liability company interest in Beartooth DevCo LLC (Beartooth DevCo), which collectively own certain midstream infrastructure assets developed
by the Company in the Williston Basin of North Dakota and Montana, in exchange for (i) the issuance by the Partnership to OMS Holdings of 5,125,000 Common Units, 13,750,000 subordinated units representing limited partner interests in the
Partnership (the Subordinated Units), (ii) a distribution of approximately $113.9 million, (iii) the right to receive the Deferred Issuance and Distribution (as defined in the Contribution Agreement) and (iv) the issuance
to the General Partner of all of the equity interests in the Partnership classified as Incentive Distribution Rights under the Amended and Restated Agreement of Limited Partnership of the Partnership (the Partnership
Agreement).
The foregoing description is qualified in its entirety by reference to the full text of the Contribution Agreement,
which is attached as Exhibit 10.1 to this Current Report on Form
8-K
and incorporated in this Item 1.01 by reference.
Omnibus Agreement
On
September 25, 2017, in connection with the closing of the Offering, the Company entered into an Omnibus Agreement (the Omnibus Agreement) with the Partnership, OAS LLC, OMS Holdings, OMS, the General Partner and OMP Operating,
pursuant to which:
|
|
|
the Company granted the Partnership a right of first offer (ROFO) with respect to (i) its retained interests in each of Bobcat DevCo and Beartooth DevCo and (ii) any other midstream assets that the
Company or any successor to the Company builds with respect to its current acreage and elects to sell in the future, which ROFO converts into a right of first refusal (ROFR) upon a change of control of the Company;
|
|
|
|
the Company provided the Partnership with a license to use certain Company-related names and trademarks in connection with the Partnerships operations; and
|
|
|
|
the Company agreed to indemnify the Partnership for certain environmental and other liabilities, including certain liabilities related to the Mirada litigation (as described in the Omnibus Agreement, the Mirada
Litigation), and the Partnership agreed to indemnify the Company for certain environmental and other liabilities related to the Partnerships assets to the extent the Company is not required to indemnify the Partnership.
|
The maximum liability of the Company for its indemnification obligations under the Omnibus
Agreement will not exceed $15 million and the Company will not have any obligation under this indemnification until the Partnerships aggregate losses exceed $100,000; provided that the Companys indemnification obligations with
respect to the Mirada Litigation are not subject to the aggregate limit or deductible. The Company will have no indemnification obligations with respect to environmental claims made as a result of additions to or modifications of environmental laws
enacted or promulgated after the closing of the Offering and its indemnification obligations (other than with respect to the Mirada Litigation) will terminate on the third anniversary of the closing of the Offering.
The Partnership has agreed to indemnify the Company against all losses, including environmental liabilities, related to the operation of the
Partnerships assets after the closing of the Offering, to the extent the Company is not required to indemnify the Partnership for such losses.
The initial term of the Omnibus Agreement will be ten years from the closing of the Offering and will thereafter automatically extend from
year-to-year
unless terminated by the Partnership or the General Partner. The Company may terminate the Omnibus Agreement in the event that it ceases to be an affiliate of the
Partnership and may also terminate the Omnibus Agreement if the Partnership fails to pay amounts due under the agreement in accordance with its terms. Additionally, both the ROFO and the ROFR in the Omnibus Agreement will terminate in the event the
Company elects to sell the General Partner to a third party (other than in connection with a change of control of the Company). The Omnibus Agreement may only be assigned by a party with the other parties consent.
The foregoing description is qualified in its entirety by reference to the full text of the Omnibus Agreement, which is filed as Exhibit 10.2
to this Current Report on Form
8-K
and incorporated in this Item 1.01 by reference.
Ninth Amendment to
Second Amended and Restated Credit Agreement
On September 25, 2017, OPNA, as borrower, the guarantors party thereto, Wells Fargo
Bank, N.A., as administrative agent (the Administrative Agent), and the lenders party thereto entered into the Ninth Amendment to Second Amended and Restated Credit Agreement (the Credit Agreement) with its bank syndicate
(the Amendment), which provides for (i) the transactions to be undertaken pursuant to the Contribution Agreement, and (ii) each of Bobcat DevCo and Beartooth DevCo (each a DevCo) to (a) enter into limited recourse guaranty
agreements by and between each DevCo and the Administrative Agent in order to guarantee the obligations of OPNA under the Credit Agreement up to the collateral amounts secured by each such DevCos DevCo Mortgage (as defined in the Credit
Amendment), and (b) to grant to the Administrative Agent the DevCo Mortgages to provide additional collateral to secure indebtedness under the Credit Agreement.
In addition, the lenders under the Companys revolving credit facility reaffirmed the Companys borrowing base and elected
commitments at $1,600 million and $1,150 million, respectively, for the period from the effective date of the Amendment to the next redetermination date. The lenders aggregate commitment can be increased to the full $1,600 million borrowing
base by increasing the commitment of one or more lenders.
The foregoing description is qualified in its entirety by reference to the full
text of the Credit Agreement Amendment, which is filed as Exhibit 10.3 to this Current Report on Form
8-K
and incorporated in this Item 1.01 by reference.
Services and Secondment Agreement
On September 25, 2017, in connection with the closing of the Offering, the Company entered into a
15-year
Services and Secondment Agreement with the Partnership (the Services and Secondment Agreement), pursuant to which, the Company will, or
will cause its affiliates to, perform centralized corporate, general and administrative services for the Partnership. The Company will also second to the Partnership certain of the Companys
employees to operate, construct, manage and maintain the Partnerships assets. The Services and Secondment Agreement requires the Partnership to reimburse the Company for direct general and administrative expenses incurred by the Company for
the provision of the above services. Additionally, the Partnership will reimburse the Company for compensation and certain other expenses paid to employees of the Company that are seconded to the Partnership and who spend time managing and operating
the Partnerships business. The expenses of executive officers and
non-executive
employees will be allocated to the Partnership based on the amount of time spent managing the Partnerships business
and operations. The reimbursements to the General Partner and the Company will be made prior to cash distributions to holders of the Partnerships Common Units.
The foregoing description is qualified in its entirety by reference to the full text of the Services and Secondment Agreement, which is filed
as Exhibit 10.4 to this Current Report on Form
8-K
and incorporated in this Item 1.01 by reference.
Relationships
OAS LLC is a direct
wholly owned subsidiary of the Company, and each of OPNA, OPM and OMS Holdings are direct wholly owned subsidiaries of OAS LLC. OMS Holdings holds 100% of the limited liability company interests in OMS and all of the Class A Units of the
General Partner (which are vested with all management rights with respect to the General Partner and have the right to approximately 90% of the economic benefits associated with the General Partner). The General Partner holds the
non-economic
general partner interest of the Partnership and the right to receive the incentive distribution rights, as described in the Partnership Agreement. OMS Holdings holds 5,125,000 Common Units and
13,750,000 Subordinated Units and has certain rights to receive up to an additional 1,125,000 Common Units in the future if the Underwriters do not exercise the Option. If the Underwriters do not exercise the Option, OMS Holdings will own
approximately 72.7% of the limited partner interests in the Partnership. As a result of the foregoing relationships, certain individuals, including officers and directors of the Company, OAS LLC, OPNA, OPM, OMS Holdings, OMS and the General Partner,
serve as officers and/or directors of more than one of such other entities.